The importance of Venture Capital for young, innovative companies with high growth potential and its wider impact on the economy is undeniable. Only a few countries have managed to achieve a dynamic venture capital market with ability to grow organically, however. For this reason, governments in the European Union, including Latvia, have sought to stimulate domestic Venture Capital market activity. There is no consensus among policymakers or researchers on how to foster the development of the venture capital market. In Latvia, as in other countries trying to harness venture capital investments to support small and medium-sized enterprises, there is no comprehensive policy to develop the Venture Capital market. Instead, sporadic actions are taken, including periodically allocating public funding for local Venture Capital funds and encouraging entrepreneurs to use such funding. Public support for an industry is an exceptional measure, which is admissible for a limited period of time. Nevertheless, public funding for Venture Capital funds has been provided in Europe for several decades, and in Latvia since its EU accession. The research carried out for the thesis aimed to identify the conditions necessary to achieve a self-sustaining venture capital market capable of organic growth using a multi-factor analysis of the impact on different sides of Venture Capital market, and then to develop a model for more effective state support. The characteristics of a self-sustaining venture capital market were identified, which should also be the objectives of government policy. An assessment of the self-sufficiency of the Latvian Venture Capital market was also carried out. Based on an analysis of the scientific literature, the factors affecting the Venture Capital market and each of its dimensions (supply, demand and total market activity) were identified. The importance of these factors in Latvia was determined on the basis of an analysis of Latvian Venture Capital funds, their portfolio companies, and the results of a survey of experts. This was used to elaborate a model for the development of a self-sufficient Venture Capital market, and its use is recommended in the design of future state support programmes for the Venture Capital market, as well as in the evaluation of their results. The thesis was written in English. It contains an introduction, four chapters, plus a conclusions and recommendations section, as well as a bibliography with 158 references. It contains 26 figures, 41 tables and 14 annexes. The dissertation runs to 190 pages, including annexes.